The following Banking & Finance guidance note Produced in partnership with Norton Rose Fulbright provides comprehensive and up to date legal information covering:
Pre-Delivery Payment financing (PDP financing) has developed into a commonly used financing tool for airlines and lessors. However, the increase in the number of PDP financings has led to close scrutiny by the aircraft manufacturers into the industrial and commercial issues which arise as a result of the involvement of a financier in aircraft purchase arrangements. In any PDP financing there may therefore be significant commercial issues to be negotiated, as well as sometimes complex legal issues, particularly in relation to security, to be considered.
Pre-Delivery Payments (PDPs) are stage payments which are payable by the purchaser (eg an airline) to the aircraft manufacturer (eg Boeing or Airbus) under an aircraft purchase agreement, over a period of months or years before delivery of the aircraft. PDPs can account for a substantial portion (eg 30%) of the total aircraft purchase price. Many tens of millions of dollars may therefore be payable at intervals such as 24 months, 18 months and 12 months before the delivery date of each aircraft.
PDPs provide working capital to the aircraft manufacturers during the manufacturing process, and also protect the manufacturers from the risks of a default by the purchaser. However, significant cash payments are required to be made by the purchaser before each aircraft is delivered
**excludes LexisPSL Practice Compliance, Practice Management and Risk and Compliance. To discuss trialling these LexisPSL services please email customer service via our online form. Free trials are only available to individuals based in the UK. We may terminate this trial at any time or decide not to give a trial, for any reason. Trial includes one question to LexisAsk during the length of the trial.
To view the latest version of this document and thousands of others like it, sign-in to LexisPSL or register for a free trial.
Existing user? Sign-in
Take a free trial
Take a free trial
0330 161 1234